Savings Update: Cash Isa rates edge up

20 September 2017

Cash Isa rates have edged up with the launch of Charter Savings Bank easy-access account at 1.05%. In its wake, Coventry Building Society upped the rate on its Easy Access Cash Isa from 0.96% to match it while Paragon Bank also pays 1.05%

You can earn a whisker more – 1.06% -  with Virgin Money’s Defined Access Isa but with this account you are limited to making three withdrawals a year.

Charter Savings Bank has also launched top fixed rate deals.  Its one-year fixed rate cash Isa pays 1.31% while Virgin Money pays the top two-year fixed rate at 1.55%, followed by Charter at 1.52%

On easy-access Ulster Bank continues to offer the top deal at 1.25% where the rate does not include a bonus.

ICICI Bank Hi-Save Bonus Account also pays 1.25% but the rate includes a 0.6 percentage point bonus payable to 30th September next year. 

Other top deals include Shawbrook Bank, Bank of Cyprus UK and RCI Bank all at 1.2%. Remember that deposits with RCI Bank are covered by the French deposit scheme rather than the UK’s FSCS.

On one-year fixed rate bonds, new internet bank Wyelands pays 1.83%. For two years – Atom Bank pays 2.05%, although this account must be opened via smartphone.

Watch out for savings traps

Banks and building societies are coming out with new accounts paying top rates for new savers. But don’t just go for the rate on these easy-access taxable accounts or tax-free cash Isas – make sure that the terms and conditions suit you. 

These are becoming increasingly complicated.  Some severely restrict the number of withdrawals you can make each year.  Others come with a bonus which disappears after a year, leaving you on a paltry rate unless you move your money to a new account.  

Virgin Money’s new Double Take E-Saver, available online only, pays 1.21%. The rate on the new easy-access account puts it just behind the top 1.25% from Ulster Bank.

But the Virgin Money account limits you to making just two withdrawals a year.  Closing your account counts as a withdrawal and so you will not be able to close it if you have already made two withdrawals in a calendar year. There are no such restrictions on Ulster Bank’s e-Savings account at 1.25%.  

The new West Bromwich Building Society Websave Single Access at 1.2% is even harsher on withdrawals – just one a year.

Yorkshire Building Society branch-based Single Access Saver at 1.1% gives you access to your money on just one day a year.  On that particular day – of your choice – you can make as many withdrawals as you like.

New bonus accounts include ICICI Bank Hi-Save Bonus Saver at 1.25%. The bonus is 0.6 percentage points, payable until September next year, after which your rate falls to 0.65%. 

Shawbrook Bank and French-owned RCI Bank both pay a slightly lower 1.2% but, like Ulster Bank, there are no withdrawal restrictions or bonuses so you won’t have to move your money after 12 months if you don’t want to end up on a poor rate. 

Ford Money pays a slightly lower 1.12%, but the bank guarantees that if it raises its rate, existing savers will benefit from the increase too.  Most providers will launch a new issue of their account to attract new savers, leaving loyal savers in older issues paying lower rates of interest.

On cash Isa accounts, Skipton BS’s new Cash Isa Plus pays 1.02%, putting it among the top payers. But the rate includes a 0.27 percentage point bonus payable for the first 12 months. Your rate will drop to 0.75% once you have been in the account for a year.

West Bromwich Building Society Websave Bonus Isa at a higher 1.05% includes a 0.45-point bonus payable until 30 November 2018.  If you don’t switch out of the account once the bonus has been paid, you will earn just 0.55%.  Meanwhile, Virgin Money’s Defined Access Cash Isa at a top rate of 1.06% restricts you to three withdrawals a year. If you make any more, your rate tumbles to 0.25% for the rest of the year.

Top buys where there are no withdrawal restrictions include Coventry BS Easy Access Isa at 1.05%.  It is a flexible cash Isa which means you can take money out and replace it during the same tax year without affecting your £20,000 annual cash Isa allowance. 

How to beat inflation

To beat inflation, currently running at 2.7%, compromises need to be made as all of the small number of regular savings accounts that pay more than inflation require savers to have a current account with the provider. We regularly keeps tabs on the savings market has found there are nine accounts that currently beat inflation.

This article was written for our sister magazine Money Observer.



In reply to by anonymous_stub (not verified)

Someone should tell Santander that interest rates are creeping up. They have just informed me that the interest rate on my savings acount has a new name called EVERYDAY SAVER (A) and the interest rate is changing from 0.5% down to 0.1% on 3rd OctI kept £1,000 in it for emergencies but obviously I will now be closing this account.

In reply to by anonymous_stub (not verified)

Why is it that the majority of instant access and fixed rate savings account rates are a high interest rate than the isa accounts, this goes for instant right through to 5 year. I am of the opinion they don't want anyone to save in an isa and therefore penalise the tax free status with a lower rate !!!!!

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